Investors pumped in Rs 11,710 crore into equity mutual funds during the three months ended June, a slump of 62 per cent from the preceding quarter on account of market volatility and uncertain economic environment due to the COVID-19 pandemic.
The positive inflow pushed the asset base of equity mutual funds (MFs) to Rs 7.01 lakh crore by June-end from Rs 5.78 lakh crore at the end of March, data from the Association of Mutual Funds in India showed.
As per the data, inflows into equity and equity-linked schemes were at Rs 11,710 crore in the three months ended June, compared to Rs 30,703 crore in the January-March quarter.
Investment into equity-oriented schemes was at Rs 17,670 crore in the April-June quarter 2019.
Industry experts said a drop in quarterly net flows into equity funds could be on account of market volatility and uncertain economic environment due to the COVID-19 pandemic.
Of Rs 11,710 crore investment in the June 2020 quarter, the schemes attracted Rs 6,213 crore in April, Rs 5,256 crore in May and Rs 240.55 crore in June, which was the lowest investment level in four years.
Morningstar India Associate Director (Manager Research) Himanshu Srivastava attributed the lower inflow in equity-oriented funds in June to outflow from multi-cap and large-cap funds due to profit-booking by investors, given the surge in markets in recent times.
Inflow through Systematic Investment Plans (SIP) dropped to Rs 24,416 crore in the period under review compared to Rs 25,686 crore in the March quarter.
Moreover, investment through the route fell below Rs 8,000 crore in June, making it the first such decline since November 2018.
Net investments through such route stood at Rs 7,927 crore in June, against Rs 8,123 crore in May and Rs 8,376 crore in April.
Experts said the slowdown in monthly SIP contribution could be due to strain on cash flows and incomes experienced by several investors on account of the COVID-19 situation.
They, further, said that once the economic situation improves, the flows should also pick-up as SIP helps investors in rupee cost averaging and also in investing in a disciplined manner without worrying about market volatility and timing the market.
Overall, mutual funds have witnessed over Rs 1.24 lakh crore inflow across the schemes in June quarter.
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